Is Your State Receiving a Failing Grade When It Comes to Small Business?

A new study shows which states make life easy for business, and where it causes a headache.

Not all business climates are created equal.

Owners in some states have a much harder time running their businesses than others, according to a new study from Thumbtack. More than 12,000 business owners in 35 states were asked to rank their state on a variety of factors, including labor regulations, training programs, and ease of hiring. States then received a letter grade signifying the overall friendliness of their business environment.

Texas, Tennessee, and Utah share the title of business-friendliest state, each earning an A+ grade. Far and away, the states where business owners perceived regulations as straightforward or easy to follow tended to receive the highest grades. States where it’s easy to obtain a business license also typically got higher marks from business owners.

Meanwhile, California, Connecticut, and Illinois are flunking out, as each received an F from the study. Costly licensing procedures, burdensome environmental regulations, and unfavorable tax codes hampered all three.

Concerns at the state and city level differ slightly for small business owners. Locally, licensing rules and regulations are the most pressing issue for many owners, while tax policies are the highest priority at the state level.